SiriusXM Suffers Crushing Loss in High-Stakes Courtroom Battle

In a ruling with far-reaching consequences, Flo & Eddie of The Turtles convince a judge that their public performance rights were violated

A California federal judge has delivered a legal earthquake in the music industry by declaring Flo & Eddie of The Turtles the victors in a lawsuit against SiriusXM over the public performance of pre-1972 sound recordings. The plaintiffs are seeking $100 million in damages, but the money is hardly the only consequence of a ruling on Monday that could eventually disrupt the operations of the satellite radio giant as well as other services like Pandora.

The lawsuit was filed in August 2013 and dealt with music created before sound recordings began falling under federal copyright protection. Flo & Eddie aimed to punish SiriusXM for not seeking authorization nor paying royalties on hit songs like "Happy Together," "It Ain't Me Babe" and "She'd Rather Be With Me," while the satcaster warned that interpreting state laws to cover public performance "would radically overturn decades of settled practice."

U.S. District Judge Philip Gutierrez, who previously acknowledged that the case "could have far-reaching effects," has elected to grant summary judgment to the plaintiffs on the issue of whether SiriusXM violates public performance rights.

In reaching the conclusion, the judge examines a California law that was enacted in 1982 and meant to address pre-1972 recordings. The statute was silent on whether “exclusive ownership” of pre-1972 sound recordings carries within it the exclusive right to publicly perform the recording. As such, the judge had to determine whether California's law was inclusive or exclusive — and the judge's reading of the law is that other than the exception for cover songs, there's nothing exclusive about it.

Judge Gutierrez writes he "infers that the legislature did not intend to further limit ownership rights, otherwise it would have indicated that intent explicitly."

SiriusXM failed to persuade the judge that California's law was ambiguous in the wake of the passage of new federal copyright law and also struck out in its contention that decades of television and radio broadcasters, restaurant and bar owners, website operators and others exploiting pre-72 music supported its interpretation of the law.

The plaintiffs, represented by Harvey Geller and Henry Gradstein at Gradstein & Marzano, pointed to two prior cases including one ruling that dealt with a website that sold 25 cent songs from The Beatles, for the proposition that precedent supported their cause.

"Although the breadth and specificity of cases acknowledging that exclusive ownership of a sound recording includes the right to publicly perform the recording are slight, Defendant has not directed the Court to a single case cutting against the right to public performance, even implicitly or in dicta," writes the judge.

Judge Gutierrez won't go so far to grant the plaintiffs a summary judgment win on the issue of whether SiriusXM violated reproduction rights by copying recordings on servers and through on-demand offerings. He writes that the plaintiffs still need to show more evidence on this.

But overall, this is a whopping ruling with consequences almost impossible to overstate. In the short term, the ruling will likely be appealed as the plaintiffs eye a trial that will determine the awarding of damages. In the long term, it could compel SiriusXM, Pandora and many in the tech industry to strongly lobby Congress for new copyright laws that cover pre-1972 recordings. The ruling also will — or should — be read closely by other businesses including terrestrial radio operators and bars that publicly perform older music.

SiriusXM is facing another lawsuit from the RIAA in California as well as more lawsuits from Flo & Eddie in other states. Pandora is also facing a lawsuit by record labels in New York. And the ruling potentially opens the floodgates to more litigation on the issue of pre-1972 music.

UPDATE October 1, 4 PM: SiriusXM has announced that it intends to appeal.